Paths to Russia: From War to Peace
Book Notes #26
F. Wilhelm Christians, the author of Paths to Russia, was a lieutenant in the Wehrmacht, and fought on the Ostfront against the Soviet Union. He was later to become Chairman of the Supervisory Board of Deutsche Bank. His book offers a unique view into the Soviet Union at the very end of its existence. As a German, the Soviet Union was a reality to Christians and not a set of military statistics in NIEs, as the Americans viewed it. German business therefore sought a practical trading relationship with the Soviet Union and not a permanent and existential state of confrontation. Germany has long been in the business of trading gas with Russia, which will be of interest given recent events related to the Nordstream 2 pipeline. The Americans have long been opposed to German-Russian economic partnership.
The book contains a foreword by the former German chancellor Helmut Schmidt. As Schmidt’s forward says:
“Conversely, the White House has always seem very quick to demand that we participate in “letting the Soviets pay the price” or “punishing Moscow” by means of economic or trade warfare. The bitter dispute between the United States and us Europeans, France’s President Mitterand and particularly me, over the European-Soviet pipeline deal is a striking example. Christians correctly describes our motivation (namely diversification of our imports of primary energy since we did not have considerable quantities of oil and gas in our own territory) and at the same time our self-imposed limitations on Soviet gas imports. In order not to become dependent on Soviet deliveries, my government had put a ceiling on Russian gas imports of no more than thirty percent of our natural gas consumption and, even more important, of no more than five percent of our total consumption of primary energy, our degree of dependence on OPEC deliveries still remaining many times higher. President Reagan obviously neither knew this nor bothered to listen to us.
Time and again American administrations have allowed themselves to be misled about the volume of our trade with the Soviet Union. At the end of my chancellorship, German exports to the Soviet Union amounted to less than two percent of our total exports, and our imports from the Soviet Union were minimal as well.”
The Chancellor sets the stage well for the frustrations the Germans faced in rapprochement with Russia. Despite their relatively recent major war, which doesn’t even begin to describe the enmity between them, the Germans and Russians were attempting to come together, to the aggravation of the Americans.
1969 marked the first year in which trade between the Soviet Union and Germany began, starting with the firm Mannesmann exporting large-diameter steel pipes for natural gas lines.
https://content.time.com/time/subscriber/article/0,33009,904158,00.html
Before this deal, a pipe embargo had been placed on such trade in 1962 by the German government, under pressure from the Americans. Christians describes the effects of the embargo this way (p. 11):
“The often observed distrust of the Soviets toward their Western partners now waxed even stronger. And on the German side, the embargo led to a certain alienation from and finally aloofness toward Moscow. We grew further and further apart—for seven years.”
One thing the Soviets had a problem with is that Christians was sent to Germany as a private individual negotiating on behalf of a business, not the state. In the Soviet Union, Christians was only negotiating with the state, as was the Soviet way of doing business. The Soviets were not used to private entities. The could never completely wrap their head around the fact that Christians was not a representative of Germany as such. Christians and the Germans likewise had to learn how the Soviets did business (p. 27):
“We quickly realized that we had to study the Soviet system more closely in order to read the Soviet negotiations correctly—that is, understand their constant irritating reactions and their way of thinking. And so we familiarized ourselves with the methods and mentality of the Five-Year Plan.
In the Soviet Union “achievement”—and I use the term advisedly—is demonstrated chiefly by the attainment of a goal set by the central planners, for whom quality is a side issue. Since products are generally distributed by way of allocation, an occasional complaint may be voiced, but there is no mechanism for consumer feedback concerning the quality of products. The only “achievement” that counts for the individual worker is achieving the quota, or rather, recording this achievement in the appropriate documents. The quota is what rules the thoughts and actions of everyone involved in the production process, all the way up to the boss. The most important thing is not to make waves. Needless to say, this requires a lot of mutual back scratching. From there the path leads straight to corruption.”
Christians again describes how the Americans viewed the German business with the Soviet Union:
“Naturally, or dealings with Moscow, which did not and were never meant to remain secret, aroused skepticism, distrust, and perhaps even a little envy among our Western friends. Indeed, the United States government voiced some pointedly adverse criticism, which I will discuss in greater detail below. Even sharper reactions were provoked by the so-called Yamal pipeline agreement, which was negotiated between 1979 and 1982 with the participation of several Western European nations. The United States, with Secretary of State Alexander Haig in the lead, took a harsh stance against this multilateral contract. Major American newspapers accompanied our dialogue with frequently unfriendly comments. The main reproach was that by importing Soviet gas as heir primary energy source, the Federal Republic of Germany and other Western countries would become overly dependent on the Soviet Union and therefore vulnerable to its political pressure during periods of tension. Moreover, the payments in hard Western currency would fill up the Soviet war chests.”
Christians also describes the Soviet way of thinking
“Meanwhile, things have started changing in the Soviet Union. Attempts are being made to reform the centralized planning, execution, and allocation of national resources. Reformers want to decentralize and redistribute authority, but Soviet minds are still too unaccustomed to this new way of thinking and attitudes are slow to change. Not only is this new approach unfamiliar, but it also puts a tremendous burden on the people operating within the traditional system. They now have to use their own judgement when making decisions, and occasionally they even have to deviate from the formulated plan. Earlier, such steps were utterly inconceivable. In fact, individuals thinking and acting on their own would almost certainly have been accused of sabotage and duly punished rather than praised and duly rewarded with a promotion.”
Christians believed that this sort of reform was necessary for a more productive economy, but he described such change as a “mental atomic bomb”—in that such thinking could not be limited to specific areas horizontally or vertically. The effects of sharing in thinking and decision making would alter the Soviet Union on a fundamental social level without predictable consequences.
In order to effectively trade internationally, the Soviet Union had to make a “convertible ruble” that could be exchanged internationally. Soviet price controls were in the way of giving that currency realistic buying-power parity, however. Reforming the Soviet system effectively could not be done in bits and pieces.
The author, as in the previous book I reviewed, and frankly almost every western commentary on the Russians that I read, invokes Russian paranoia and hypersensitivity to possible Western subversion of the Soviet Union. This is not to understate the fact that “paranoia” was a fundamental building block of the Soviet Union, but to underline the fact that the Soviets were not tilting at windmills, but recognizing actual Western subversion of the Soviet Union, to an extent, which is demonstrated in the way Poland was brought into a debt trap with the West.
The Soviets were regarded by the West as reliable debtors. The author brings up the issue of Poland’s massive debt to the West. Poland was propping up its government with western loans, and in 1981 owed $28 billion. The Soviets were paranoid about Poland’s massive debt to Germany, which they had had no idea about. The Soviets rebuked the German banks, who they believed were meticulous and thus the only motivation for continued loans to Poland must have been to break apart the Warsaw Pact.
As a solution, it was suggested that Poland enter the IMF—but the Soviets did not want Poland in this organization where, unlike the U.N., was controlled by Western votes. The Americans did, in fact, view this as an opportunity (p. 45):
“The Americans were unmistakably thinking along those very lines. Weinburger concluded that the West now had a new weapon to deploy against the Soviet Union. “We can’t get at them by military means and perhaps not by political means, but now we have the credit weapon and we ought to use it.””
This “credit weapon” is what is used in Europe to keep the European Union countries in line. The poorer EU countries also happen to be the ones with more nationalistic tendencies—but if any government implemented policy that was out of line with the “ESG scores” and “Diversity, Equity, and Inclusion” policies, the IMF would leave them out to dry, and their politicians would have to be responsible for massive economic turmoil, which no politician has yet been brave enough to stomach.
The author next discusses negotiations for gas pipelines from the Novi Urengoi deposits in Siberia. These negotiations were interrupted by the commencement of the Afghan war. There is not much of interest to discuss in this chapter, other than the attitude of the people in Siberia.
“In the early 1980s, Novi Urengoi had some thirty thousand inhabitants. With its one tarred road, it resembled a gold rush town in he American West—thought with a less hospitable climate. The average age of the population, which was expected to triple by the end of the century, was just under thirty, with a distinct surplus of men. Lured by relatively high salaries and special vacations, the young people sign up for the not-exactly-pleasant jobs in the gas fields. Many of the recruits are students who hope that his sacrifice will get them into Moscows institutes of higher education.
Despite tough conditions and a modest, if not bleak way of life, the morale, I was glad to note, was high. The leaders—engineers and factory directors—were proud and self-confident because of the importance of their work. Their attitude was understandable. By the n they were already producing 650 billion cubic yards of gas annually, and the quota was to rise to 1.1 trillion by 1990. The people extract the gas from the barren soul of the tundra, which is solid only in winter, and they sell it for valuable Western currency. I was impressed not only y their devotion and their sharp judgement but also by their self-assurance when dealing with the swollen bureaucracy in Moscow—and that was years before Gorbachev.
I found the same situation throughout my Soviet travels. The behavior of the people and also the functionaries changed noticeable the further they were from Moscow. They weren’t insubordinate by any means, but their conduct was less uniform, and they didn’t prattle rhetoric. I especially liked the Siberians for their directness and their robust vitality. The vodka, which is some what stronger in Siberia, did its part in fueling our exchange of opinions. Nowhere did I see such richly laden tables as in these barren surroundings—which showed how well the supply lines functioned.”
The author, being a former Wehrmacht officer, does comment with some frequency on the strangeness of negotiating with men who were in some way representatives of the Red Army. Formerly mortal enemies, and in some sense still enemies, they were negotiating trade deals and sometimes even becoming personally friendly. Christians was taken aback by finding several times that his negotiating opponents had sometimes fought in the same places as him and the same times. He does recount one story of his experience outside Moscow in 41/42, but readers of the blog will be highly familiar with that, so I won’t belabor the point. But if you read the book you will find it quite full of personal anecdotes of this sort. He does say that (p. 83):
“When I was a soldier in Russia, I kept looking for signs of this aggressive atheist, but I discovered the very opposite. . . . When I returned to the Soviet Union many years later, those earlier scenes were still sharply etched in my mind, and I noted that my wartime observations remained valid. I am tempted to say that transcendency is inherent in the Russian soul.”
The author clearly understands that there is something different about the Russians as compared to the Europeans, and they are not simply interchangeable with any other culture in Europe. He writes quite a bit on Orthodoxy in this formula, and conveniently, the author provides a summary of his thoughts on Orthodoxy and the Russian State near the end of the chapter:
“To sum it all up: On one side we have the great achievements in creating a modern, industrialized Soviet Union; on the other side, the daily encounter with ancient forces (especially in the non-European part). The communist rulers in the Kremlin tried to link and blend certain elements of the Eurasian continent, but those elements have never really joined together; they are still worlds apart.”
At the beginning of that chapter he describes Moscow and the changes he witnessed in the years visiting the city. When he first arrived in Moscow in 1969, he described how there were almost no private cars. Private state cars had right of way, and pedestrians using the crosswalks had “the right to be hit.”
(p. 81):
“Moscow was and still is a city of pedestrians. Granted, the number of private cars has grown visibly (I’m told that the new ones belong primarily to waiters in restaurants open only to foreigners, where bills are paid chiefly in hard Western currency). But despite the increase in vehicular traffic, Moscow’s street scene is dominated by the columns of pedestrians hurrying along the wide sidewalks. Most of these heavily laden people are charging toward the subway stations. The tableau was the same twenty years ago, but in that winter it looked infinitely bleak. Against the dirty, grayish white background of a snowy metropolis, thousands of wraithlike creatures were marching along practically in lockstep. Hushed, gloomy, and all in black, they looked like a funeral procession. During the past two decades things have gradually brightened up—quite literally.”
Clothing stores began to sell western patterns, especially denim, as well as the miniskirt, eyeliner, and makeup. Such styles were still taboo in the Soviet Union, reflecting the religiousness of the Russians. The author describes how Orthodoxy was introduced in Kiev:
“Grand Duke Vladimir of Kiev, after examining the suitability of all other religions, ordered his people to adopt the Orthodox faith as the one and only redeeming religion. In 1988 when the Russian Orthodox Church was preparing to celebrate its thousandth anniversary, the question was often asked: Why did Vladimir’s people accept this high-handed edict so quickly and then preserve this religion so fervently through all sorts of catastrophes and confusions? Dostoevsky provides an explanation that helps us understand Russian Orthodoxy. He opens our eyes to a typical feature of the Russian soul—the “intrinsic spiritual need to suffer”: “Russians,” he writes, “have always had this craving for suffering.””
He then goes on to tell how this stems from Russia’s history of great suffering from foreign invasions and foreign rule. He describes how Easter is the mot important holiday in Russia, because Christ’s passion is a solace to them. This is a good insight into Russians. In the West, our religious holidays mostly celebrate plenty, whereas the Russians celebrate that at least they aren’t suffering as much as Christ. Possibly, this relates to the Russian struggle with Jews, as Jews also have a national story of suffering as part of their heritage, and in Russian lands this sort of competition over he same religious narrative would not go over well.
Christians relates another story that shows how the Soviets never seemed to quite fully understand that he was not a representative of the German state. When the West German Olympic Committee joined the American boycott of the Moscow Summer Olympics in 1980, the Soviets panicked and asked for Christians to intervene.
“Such misunderstandings of facts were typical of Soviet officials. I was unable to make them realize which points I was authorized to negotiate and which were absolutely beyond my mandate. During the years of tension, when Moscow and Bonn were cold-shouldering each other, the Soviets still saw me on a regular basis. They would seize every opportunity to voice their criticism of Bonn’s policies in general and its action in particular. Often they were merely venting their anger on me.”
Halfway through the book, Gorbachev becomes the new general secretary of the Communist Party. The author describes the immediate changes he noticed, as was typical with a new general secretary. In Gorbachev’s case, Christians had one of the first meetings Gorbachev had had with a westerner. Unlike prior meetings, where agendas and off-limits topics were clearly set, this was to be an ended and forthright conversation. The conversation was not limited to areas in which Christians negotiated or economic issues, but started with a discussion on brining the Soviets and Germans closer together, and the obstacle of NATO nuclear missiles on West German soil. Gorbachev wanted German high technology for Soviet raw resources. He writes quite a bit about this fascinating encounter. In summary, the author relates that:
“All in all it struck me that this new general secretary was a good listener. Though he asked tough questions, he was nevertheless intent on learning from outsiders and not just his own advisers.”
One of the funniest stories in the book is an experience Christians had at the “Peace Congress” Gorbachev orchestrated in February 1987 in Moscow.
“The second item on my conference agenda was the problem of consultation. Earlier large-scale Soviet investments for imports of Western machines or facilities had often failed to achieve their goals. Valuable products that were paid for with billions in hard currency had not been put to use, ending up in various garbage dumps somewhere in this vast country. I therefore reprised my suggestion that in such cases the Soviets should hire competent industrial consulting firms in the West. I offered my audience a plausible argument: Of course, professional consulting costs money, but if you weigh this expense against the losses caused by bad or inefficient investments and factor in the time wasted on making changes or adjustments, you will see that the additional outlay for a professional consulting firm is more than justified. But ultimately, no matter how I articulated this fundamental idea, no matter how much acceptance it found in the ministries and other agencies, the Soviets always came up with counterarguments and ignored my recommendation. The chief reason for their reluctance may have been that the category of “consulting fee” did not exist in their planning budgets. Perhaps they also distrusted this “capitalist” method, suspecting some gimmick that would burden the socialist partner with additional overhead.”
This is funny because the Soviets were probably right in about consultants. I view consultants as basically parasites on actually productive labor, 98% of whose existence is a consequence of regulatory capture.
At the conference, Gorbachev spoke on the reforms he wished to make, and the author notes in relation to what he said earlier how a centrally controlled system cannot simply be changed by diktat (p. 121):
“Gorbachev’s speech contained tow major points. First of all, the new general secretary kept impressing upon his listeners that they should not always wait for orders from Moscow if a different method turns out to be more efficient than the one decreed; instead, the local people should use their own judgement in deciding what was best. As I have already said, the management personnel have been instructed to follow those new guidelines.
Flexibility has never been known or tolerated here, and it will be quite a while before it takes root. This shows how wide the gap still is between Gorbachev’s demand and he Soviet reality. Nevertheless, I must admit that one can observe more and more exceptions from the lethargy, even resignation that have characterized Soviet officials for such a long time.”
After a chapter about the creation of an economic zone in Kaliningrad for trade, the book returns to the matter of American involvement in German-Soviet relations.
“In the 1970s, when the United States was already keeping an eye on our loan talks with the Soviet Union, the American stance was what I would describe as “aloof attentiveness.” In 1981, however, at the beginning of the Reagan era, they had a change of heart. I already mentioned what Caspar Weinberger, the United States secretary of defense, said about the Polish debt situation; his talk of a “credit weapon” caused quite a stir. Soon Alexander Haig, the new secretary of state, also proved quite critical of our Eastern European contacts, and presumably Reagan agreed with him. During his first press conference after taking office, the president repeated the aggressively anti-Soviet statements he had often made during his tenure as governor of California.
This period coincided with the final phase of our Yamal pipeline talks, which involved several European allies (loans and equipment in exchange for natural gas). From the beginning the United States made accusations against West Germany and the participating firms since the negotiations were conducted privately. The charges were nothing new. We were accused of enriching the Soviet war chest with valuable Western currency, courting danger by becoming overly dependent on Moscow for indispensable fuel supplies, and weakening NATO both politically and militarily.”
Christians was asked in 1982 to attend a meeting with American delegates sent by Reagan to interrogate those doing business with Moscow. He regarded the American point of view as being remote and not understanding the historical and physical position Germany was in in relation to Russia.
“They strike me as being uninformed rather than intentionally nasty. Consequently, I go out of my way whenever possible, especially in Washington, to do something about our most important ally’s lack of knowledge.”